In the previous three articles, I talked to CIOs of IT consulting and IT services organizations. In this article, I shift gears and speak with Raj Rawal, SVP and CIO of Burger King (BK), the second largest fast food hamburger chain in the world. Raj’s challenges, although similar to those of many CIOs in terms of building efficiency and effectiveness in IT operations, are a little different in that his primary focus area is to complete laying out the fundamental IT foundation at BK.

Seventy percent of BK’s business is via “drive through,” and the economic situation, resulting in high unemployment, which in turn results in fewer miles being driven, has implications for BK’s business. BK’s “SuperFans” – its most loyal customers – are minority males between the ages of 18 and 34, who have been hit harder by unemployment than the general population, and this fact also poses challenges to BK. In spite of these challenges, the business has been supportive to the IT team in helping them to build the IT foundation for the brand.

By IT foundation, Raj refers primarily to the development of point of sale (POS) system and consistent hardware, software, and processes across the restaurants on a global basis. This project, a high priority for Raj, started two years ago and is expected to continue for the next 18 months. This is indeed the “IT foundation” for BK, because with a strong POS system and consistent hardware, software, and processes; the data generated by the system; and the analytics run on top of the data, BK could make its business a lot more efficient. For example, food costs and labor are the top two costs in a restaurant, and intelligent analytics over a globally integrated system could enable faster decision making by helping to quickly uncover areas in which greater efficiencies could be realized. A reason why integrating systems and processes is challenging for BK is the nature of the business – of the approximately 12,000 stores that BK operates globally, 90% are franchise run and only 10% company run, and integrating the new system with franchise-run stores is more challenging than with the company-run stores.

After the POS system, Raj’s second priority is information management, by which he refers to in a holistic sense, that is, the data warehouse, master data management, data storage and shipment, and the overall data governance. This is a global, multi-year, brand-wide, journey for BK, and the project is headed by a senior VP of Marketing. The idea is to really have a focused approach toward data and information management and analytics, which would help BK’s operations and marketing become more effective and efficient.

On being asked if these two priorities were a result of the economic meltdown, Raj replied that they were deemed to be important priorities even before the meltdown. Hence, the management has continued to support these projects so that BK can be better equipped to take advantage of new opportunities after the recession ends.
The two priorities discussed above feed into the infrastructure and application layers of a typical IT stack. Raj also shared a salient point on his priorities in the top layer of the IT stack, IT strategy, and management. In order to make project prioritization a more visible, conscious, and shared approach, Raj is putting “EBITDA impact this fiscal year or next fiscal year” as a criterion in prioritizing projects – he believes that viewing projects in terms of their EBITDA impact (unlike viewing them on basis of just ROI or TCO) helps to make discussions with management more effective at times.

Finally, on being asked about his take on how the IT landscape would shape the restaurant chain industry in the next five years, Raj said that for companies that have their basic, fundamental IT systems in place, technological advancements such as social media and social networking tools would give them significant advantages. Once they have the IT foundation in place, they can then focus their IT efforts on the key part of consumer-oriented business – to reach, appeal to, and retain customers. But for Raj, the first challenge is to lay this foundation, which could take several more years, before he could really reap the advantages of newer technologies, enabling BK to be really responsive to consumers and the marketplace at large.

My discussion with Raj really drove home the point that irrespective ofwhich cutting-edge options are available in the marketplace to reach consumers, it is probably in the best interest of IT management to first focus on building a strong IT foundation (the specifics of which could vary based on the nature of the business, for example, a POS system in the case of retail chains). After this is accomplished, cutting-edge customer-oriented technologies could be incorporated.

Comments

As a Senior Consultant at Evaxyx, I found this piece very useful and informative. Keep it up!
At Evaxyx, we believe that information is at the heart of any modern enterprise, and that it must be used for business advantage. We always begin by constructing a model of the data used in an enterprise. Our models promote engagement over formality. Before any discussions on data can begin, it is essential that a common basis of understanding is achieved. There are always existing perspectives to accommodate. We do this by working collaboratively and intensely with our customers.

You mention that the key foundation for the success of Burger King rests upon ‘fundamental IT systems’. However, in an interesting interview that i came across the other day, (linked in my name) Raj initially spoke about the importance of staff, suggesting that hiring new employees was paramount to the success of the IT systems and in turn, the company as a whole.

I am not sure if he is really talking about hiring new employees in that video. He instead is talking about the importance of outsourcing anything that is a “commodity” so that his in-house IT staff can engage in more value added IT work, namely business analysis, business relationship and so on. This makes sense.

Let’s look at it from the McKinsey 7S framework perspective. Systems and staff are two of the seven factors that have an influence on an organization. Staff, as you rightly pointed out is one of them. Systems, which include IT systems among several others, are another component. But when you specifically speak about IT systems, it is the “fundamental IT systems” that is the need of the day for Burger King. Now, in order to build these systems, they definitely need a strong team of IT professionals, both in house and outsourced, in place. That’s how I would reconcile your views and mine.